Irish complaints about politicians' pay remain background noise, but perhaps we could learn something from the Germans about acting against the 'greed elites'
SOME NEWSPAPER headlines are just wishful thinking, and "Politicians refuse pay hike" is one of them - yet this week the German press reported that it was true: Bundestag MPs have agreed to waive a salary increase in response to public outrage.
In light of the ongoing discussion about politicians' pay in Dublin, the Berlin decision says a lot about the level of public debate here, not to mention voter expectations of their public servants.
First the figures: Germany's 612 Bundestag MPs are paid €7,339 a month to represent an average of 100,000 citizens each, while an Irish TD earns just over €8,000 a month to represent an average of 25,000 citizens. Last year, German MPs agreed a 9 per cent pay hike over two years, which will bring their salaries to €7,946 in 2009. They also agreed to link their salaries to those of top civil servants, so when civil servants negotiated their own pay increase in April, MPs hoped they could get some of that too.
But that was the straw which broke the camel's back. Voters were outraged and more than 50 MPs from the Social Democrats (SPD) announced that they would vote against the pay rise in parliament.
Rather than risk a split in the SPD and in the grand coalition with the Christian Democrats (CDU), parliamentary party leaders agreed not to bring the issue to a vote, waiving the pay rise of an extra €500 a month by 2010.
On Thursday, Chancellor Angela Merkel announced a similar waiver, leaving her salary at €9,900 and those of her cabinet members at €8,300.
"Our people are furious with the SPD rebels," said one CDU politician, who asked not to be named. "This way we don't just look greedy for expecting the pay increase, but cowardly, too, for caving in to public pressure."
But even before this week's waiver, it was clear that it was a difficult time to try and sell a politicians' pay increase in Germany.After years of wage freezes, unions in nearly all sectors have been going on strike for better pay in recent months, while most wage deals have been modest affairs.
Sharing headline space this week with politicians' pay was a sobering government report showing that a quarter of the German population now lives below the poverty line, or just above and dependent on welfare.
This all feeds into a tangible resentment that the fruits of Germany's economic upswing are not being evenly shared.
What makes Germany different from other European countries, however, is the way anger about perceived greed is channelled into action, with top managers regularly dragged to court to justify their high salaries and bonuses.
A precedent was set after British mobile operater Vodafone took over German rival Mannesmann eight years ago. The former Mannesmann board were later charged with breaching shareholder trust for paying themselves €57 million in bonuses to seal the deal. Two years ago, former board members, including Deutsche Bank chief executive Josef Ackermann, had to pay a total of €9 million to end the investigation after two trials and years of bad publicity.
The sub-prime credit crisis caused another wave of anger in Germany, directed at bank managers who called for state bail-outs. Thomas Straubhaar, an economic adviser to the federal government, attacked the trend, saying: "Bank profits are to be privatised and losses nationalised - I consider that screamingly unjust."
The "greed elites" debate peaked last week when German president Horst Köhler attacked "bizarrely well-paid" managers who "very nearly caused the collapse of the world finance markets" but had "yet to make a clear mea culpa".
"The international finance market has turned into a monster that must be put in its place," said Köhler, an economist and former head of the International Monetary Fund. This was the week when German politicians realised that they ignore the "greedy elite" debate at their peril.
"Politicians here understand they are a role model of sorts," said Alexander Skiba, programme officer for the Alfred von Oppenheim Centre for European Studies. "They also know the issue of excessive pay for elites is an important issue for the middle- and lower-class voters who will decide the next election."